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A Birthday Present from Social Security

© Ann Needle

You may have noticed a birthday present from the Social Security Administration (SSA) this year. That's because, about a year ago, the SSA began mailing new statements of estimated benefit to any American age 25 or older who is not currently receiving benefits: You can expect to receive one around your birthday. Designed to better help you understand exactly how much you can expect from Social Security given your age and current earnings, the statement is actually a useful morsel in a nation of government red tape.

What's In the Gift

The information in your statement includes estimates of your future retirement, disability, and survivor benefits.

In short, the Social Security statement now provides an estimate of your retirement benefits if you have already earned at least 40 credits during your working life. Each year, the SSA calculates the number of credits that you earned that year based on your reported income. For example, in 1999 you earned one credit for each $740 in earned income, up to a maximum of four credits. Your statement also includes a yearly breakdown of your recorded earnings to date; the total amount of Social Security taxes paid by you and your employers over your career; and an estimate of the monthly benefit you could receive if you should become disabled.

You can also use this statement to figure out whether your earnings are accurately posted on your records. Because Social Security benefits are based on your career record, you'll want to check to see that your record of earnings is correct. For instance, if you have begun using a different name on your employment records and have not notified the SSA of the name change, some of your earnings may not have been posted to your Social Security account. If there are errors in your earnings record, follow the instructions included in the statement to notify the SSA of discrepancies.

In adition, note that your most recent calendar year earnings may not be accurately reflected on your statement. For instance, if you received a statement in 2000, your 1999 earnings may not yet be posted to your account. The SSA processes information throughout the year for the previous years' earnings based on information received from employers and the IRS. If you worked for more than one employer during 1999, all of your earnings for that year may not be posted to your account at the same time.